E12-9 Reporting and Interpreting Cash Flows from Operating Activities from an Analyst's Perspective (Indirect Method) L012-2 Time Warner Inc. is a leading media and entertainment company whose businesses include Turner, Home Box Office, and Warner Bros. A number of years ago, the company's annual report contained the following information (dollars in millions): Net loss $(13.402) Depreciation, amortization, and impairments 34.790 Decrease in receivables 1,245 Increase in inventories Decrease in accounts payable Additions to equipment 4.377 Source: Time Warner Inc 5.766 445 Required: 1. Based on this information, compute cash flow from operating activities using the indirect method. 2. What were the major reasons that Time Warner was able to report a net loss but positive cash flow from operations? Explain why the reasons for the difference between cash flow from operations and net income are important to financial analysts